THE Q3 2016 VC FINTECH INVESTMENT LANDSCAPENovember 2016

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THE 2016 VC FINTECH INVESTMENT LANDSCAPE

2Source: Pitchbook

§ 2016 has seen 839 deals globally attracting $15.2bn of investment

§ Global investment is up 27% to Q3 2016 vs the same period in 2015 and has surpassed the 2015 total of $14.9bn

§ Global deal size is slightly ahead of 2015 Q3 levels, with the average increasing from $14.3m to $18.1m, partially attributable to large Chinese investments such as Alipay

§ VC investment in the UK to Q3 2016 is down 26% at $532m YOY and has only just reached the halfway mark of the total 2015 investment of $1.1m

§ Q1 2016 YOY performance in the UK kept pace but Q2 2016 slowed dramatically to 33% of Q2 2015 investments which many analysts contributed to the general uncertainty in the run up to the Brexit referendum on 23 June 16

§ Q3 2016 recovered modestly with $139m in investment, 7% better than Q3 2015. 8 of the Top 20 UK deals closed post Brexit,23 June 2016, totaling $105m

§ The UK attracted 76 deals, the highest volume outside the US at 457, and was third in terms of total investment of $532m behind US at $5,265m and China at $7,117m

§ The UK’s Starling Bank, which raised $101m, was the only UK investment in the Global Top 20 global deals

§ Challenger Banks attracted the most investment in the UK. Starling Bank, SETL, Tandem Bank, Sonovate and Ezbob round up the top 5 FinTech deals in the UK, all over $25m in deal size

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Global

3

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GLOBAL FINTECH VC DEAL VOLUME to Q3 2016

U.S.457

Mexico8

Sweden19

Canada18

Brazil5

Russia8

Australia18

Singapore21

India37

Japan7

China14

Ireland7

France18

Germany19

Switzerland5

Netherlands7

U.K.76

Israel14

≥ 50

≥ 15

≥ 5

≥ 1

4

839 deals in total in 57 countries Source: Pitchbook

Denmark5

Finland5

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GLOBAL FINTECH VC INVESTMENT to Q3 2016

U.S.$5,265m

Sweden$54m

Canada$67m

Brazil$79m

Australia$85m

India$226m

Japan$61m

China$7,117m

Ireland$518m

France$57m

Germany$346m

Switzerland$39m

U.K.$532m

Israel$161m

≥ $500m

≥ $100m

≥ $50m

≥ $10m

≥ £10k

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$15.2 billion invested over 839 deals

Vietnam$28m

South Korea $24m

Source: Pitchbook

Hong Kong$170m

Mexico$64m

Singapore$35m

Denmark$24m

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2,0445,462

3,314

7,4016,573

2,3102,962

2,590

6,260

12,260

14,890 15,173

524

760

9831,074

839

0

200

400

600

800

1,000

0

5000

10000

15000

20000

2012 2013 2014 2015 Q3 2016

# o

f dea

ls

Capi

tal I

nves

ted

(USD

$m

)

275 279

313114

130

139

369

191

730 72254

74

110 107

76

0

20

40

60

80

100

120

0

200

400

600

800

1,000

1,200

1,400

2012 2013 2014 2015 Q3 2016

# o

f dea

ls

Capi

tal I

nves

ted

(USD

$m

)

Q1 Q2 Q3 Q4 Number of deals

GLOBAL

FINTECH VC INVESTMENT

§ Global investment to Q3 2016 has increased 27% YoY vs Q3 2015 to $15.2bn

§ 2016 investment has already surpassed the 2015 total of $14.9bn

§ Q3 has slowed to 65% of the YoY investment

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THE UK

§ UK investment to Q3 2016 has decreased 26% YoY vs Q3 2015

§ UK investment has only just reached the halfway mark of the total 2015 investment of $1.1m

§ Q2 2016 slowed dramatically to 33% of Q2 2015 possibly due to Brexit

§ 8 of the Top 20 UK deals closed post Brexit 23 June 2016 totaling $105m

Source: Pitchbook

Q3 YoY+7%

Q3 YoY-65%

1,090

532

2016 Global VC FinTech Investment

2016 UK VC FinTech Investment

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TOP FINTECH VC DEALS YTD Q3 2016§ Globally the top 3 deals came from China, however the US saw the highest deal volume, with 10 of the top 20 deals

Country:

Sector: Payments

Date: 26-Apr-16

Series: B

Size: $4,500m

Country:

Sector: InsurTech

Date: 22-Feb-16

Series: Undisclosed

Size: $400m

Country:

Sector: Capital Markets

Date: 15-Jan-16

Series: Undisclosed

Size: $1,200m

Country:

Sector: Consumer Finance

Date: 16-Jan-16

Series: A

Size: $1,013m

Country:

Sector: CapitalMarkets

Date: 31-May-16

Series: Undisclosed

Size: $400m

§ In the UK only the top deal was in the top 20 deals globally

Country:

Sector: Challenger Banks

Date: 11-Jan-16

Series: Angel

Size: $101m

Country:

Sector: Blockchain

Date: 15-Jul-16

Series: Angel

Size: $39.5m

Country:

Sector: Challenger Banks

Date: 12-May-16

Series: B

Size: $32m

Country:

Sector: SME Financing

Date: 28-Jan-16

Series: A

Size: $29m

Country:

Sector: SME Financing

Date: 10-Mar-16

Series: Undisclosed

Size: $28.5m

Source: Pitchbook

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19

18

18

9

9

9

8

8

8

8

8

7

6

6

6

6

6

Techstars

Y Combinator

500 Startups

Startupbootcamp

Sequoia Capital

Digital Currency Group

Khosla Ventures

Index Ventures

Foundersclub

Founders Fund

Financial Solutions Lab

Peter Thiel

Valar Ventures

QED Investors

Point Nine Capital

Foundation for Internet Development-…

Fenway Summer Ventures

Top global investors by number of investments

Top 20 global deals by deal value ($M)

TOP GLOBAL INVESTORS AND DEALS - YTD Q3 2016§ Techstars was the top global investor and there was one UK deal in the top 20 global deals

Source: Pitchbook

4,500

1,200

1,013

400

400

310

250

237

220

212

200

165

153

150

127

103

101

100

100

100

AliPay (China)

Lu.com (China)

JD Finance (China)

ION Trading (Ireland)

Oscar (US)

51credit.com (China)

LendingHome (US)

QuarterSpot (US)

Solar Mosaic (US)

PowerPlan (US)

Dividend Solar (US)

WeLab (Hong Kong)

Weidai.com (China)

LendUp (US)

DoorDash (US)

Kreditech (Germany)

Starling Bank (UK)

The Direct Pay Online Group (Ireland)

Affirm (US)

Betterment (US)

UK deal

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UK

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UK FINTECH VC DEALS - YTD Q3 2016 BY VERTICAL AND STAGE§ In the UK over 60% of deals where in Challenger Banks, SME Financing, Money Transfer

and FX and Digital Currencies and Blockchain verticals

Source: Pitchbook

Challenger Banks27%

SME Financing13%

Money Transfer & FX

13%

Digital Currencies & Blockchain

8%

Crowdfunding7%

Alternative Finance (other)…

Payments6%

Enterprise Software

6%

Other3%

Peer-to-Peer3%

Financial Inclusion and

Education3%

Wealth Management

2%

Capital Markets

2% Data & Analytics

1%

2.81

2.78

60.61

85.54

99.49

280.73

0.00 50.00 100.00 150.00 200.00 250.00 300.00

0 - 499K

500K - 0.9M

1M - 4.9M

5M - 9.9M

10M - 24.9M

25M+

USD (m)

Dea

l siz

e

Deal value (number of deals)

UK deals by vertical UK deals by value

(7)

(8)

(11)

(23)

(4)

(23)

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Top UK investors by number of investments Top 20 UK deals by deal value ($M)

5

4

3

3

3

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

Entrepreneur First

Balderton Capital

Techstars

Passion Capital

Index Ventures

William Reeve

Venrex

Velocity Capital Private Equity

Seedcamp

Samos Investments

Point Nine Capital

Notion Capital

MCI Capital

LocalGlobe

Holzbrinck Ventures

Global Founders Capital

e.ventures

DN Capital

Dawn Capital

Alex Chesterman

TOP UK INVESTORS AND DEALS - YTD Q3 2016§ Entrepreneur First was the UK’s top investor and within the top 20 UK deals there were 7

Innovate Finance members

Source: Pitchbook

101.0 39.5

31.9 28.9 28.5

26.0 25.0

22.6 13.4 13.0

10.5 10.0 10.0 10.0 10.0 9.6 9.5 8.7 8.2 8.2

Starling BankSETL

Tandem (Retail Bank)Sonovate

EzbobTransferWise

LendInvestProperty Partner

AzimoGoCardlessCrowdcube

Money Guide AppWeSwap.com

PaylevenReceipt Bank

RevolutMarketInvoice

NeyberDueCourse

Meniga

Innovate Finance member

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Sector: FX

Date: 11-Jul-16

Series: A

Size: $9.6m

MainInvestors

BaldertonCapital. Ribbit Capital, Index Ventures

Sector: Peer-to-Peer

Date: 18-Julr-16

Series: Undisclosed

Size: $9.5m

MainInvestors

MCI Capital,North Zone Ventures

Sector: SME Financing

Date: 19-Sep-16

Series: Undisclosed

Size: $8.3m

MainInvestors

Global Founders Capital, Simon Franks, Alex Chesterman

Sector: Financial Inclusion

Date: 23-Aug-16

Series: B

Size: $8.2m

MainInvestors

Velocity Capital Private Equity and Frumtak

Sector: Blockchain

Date: 15-Jul-16

Series: Angel

Size: $39.5m

MainInvestors Undisclosed

Sector: Crowdfunding

Date: 18-Aug-16

Series: Undisclosed

Size: $10.5m

MainInvestors

Crowdfunded(own platform)

Sector: Other

Date: 15-Aug-16

Series: Angel

Size: $10m

MainInvestors Undisclosed

Sector: FX

Date: 11-Jul-16

Series: B

Size: $10m

MainInvestors

Ascot Capital Partners, EC1 Capital, IW Capital

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POST BREXIT ROUNDS IN UK§ 8 of the top 20 deals in the UK were post Brexit, totaling $105m of investment

Source: Pitchbook

Money Guide App

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UK Q3 2016 analysis§ 64% of investment was follow-on investment, with 67% of investment coming from investors domiciled

in the UK

Source: Pitchbook

Digital Currencies & Blockchain,

28%

Money Transfer & FX, 15%

SME Financing, 9%

Other, 10%

Crowdfunding, 8%

Payments, 5%

Enterprise Software, 1%

Peer-to-Peer, 7%

Financial Inclusion and Education, 6%

Wealth Management, 6%

Capital Markets, 1%

Data & Analytics, 3%

59%

17%

3%

17%

3%

67%

8%

0%

25%

0%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

UK USA Asia Europe Unknown

Q3 2015

Q3 2016

• 36% new investment (mostly SETL)• 64% follow-on investments

Q3 UK deals by vertical Domicile of source of investment (Q3 2015 vs Q3 2016)

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New Funds

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FUND LOCATION SIZE DATE LAUCHED INVESTMENTS MADE

Singapore Initial capital of $5m from Life.SREDA, but looking to

expand to $50m by the end of 2016 and top

$100m by 2017

Apr-16 None to date

China

$200m May-16 None to date

Ireland

€500k May-16 None to date

China

Undisclosed May-16 None to date

USA

$25m Jun-16

None to date (previous funds have invested in 80 FinTech companies over

the last 6 years)

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NEW FINTECH FOCUSED FUNDS LAUNCHED IN 2016 (GLOBAL) (1/3)

Enterprise Ireland Competitive Start Fund (CSF)

§ Several FinTech focused funds have been launched in 2016 so far, a good indicator that investment momentum will continue

FinTech

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FUND LOCATION SIZE DATE LAUCHED INVESTMENTS MADE

UK

£20m Established Jun-16, launch date unknown N/A

Germany

Undisclosed Jun-16

Includes some existing investments e.g. Digital Assets holdings (Blythe

Masters’ Blockchainstartup)

Switzerland

CHF 10m Jun-16 None to date

UK

£100m (follow on investment) Jul-16

Original fund has invested in Ripple (Blockchain - US),

iZettle (payments -Sweden), Elliptic

(Blockchain – UK).

USA

$300m Sep-16

None to date however canvas's first fund, raised

in 2013, was an investor in Lending Club

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NEW FINTECH FOCUSED FUNDS LAUNCHED IN 2016 (GLOBAL) (2/3)

DB1 Ventures

Ventures

§ Several FinTech focused funds have been launched in 2016 so far, a good indicator that investment momentum will continue

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FUND LOCATION SIZE DATE LAUCHED INVESTMENTS MADE

Europe €300m Sep-16

One investment from previously fund

“Northzone VIII” – Zervant(A-invoicing – Finland)

Europe £7.4m Sep-16 (unfrozen after Brexit pause) None to date

Australia Initially seeking to raise$27.5m - $55m via IPO, however the minimum

amount was not raised so the fund is going private

Sep-16 N/A

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NEW FINTECH FOCUSED FUNDS LAUNCHED IN 2016 (GLOBAL) (3/3)

Capital Accelerate and Scale Tech Startup (CASTS)

(8th fund)

§ Several FinTech focused funds have been launched in 2016 so far, a good indicator that investment momentum will continue

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END

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